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Why do sellers pay the buyers’ closing costs?

Crofton Real Estate Q&A

Q. My closing costs for selling are already close to 10%.  Why do I have to pay buyers’ closing costs, too?

A. The buyers’ closing costs are just that… the buyers’ closing costs.

Who pays what at closing is more a matter of custom and agreement than law, with the exception being for some items which buyers are prohibited from paying for certain types of financing – most notably, VA and FHA.

I’m guessing someone has mentioned this to you in the context that many of today’s home sellers are paying some or all of the buyers’ closing costs… am I right?  Let me explain.

This is a buyers’ market, i.e., a market that favors buyers over sellers.  Buyers know they are few and far between, so they enter negotiations with a home seller from a position of strength. They often ask for the sun, moon and stars – in other words, offering a low price or asking for concessions such as closing help.

In many cases, sellers do agree to a lower price and/or closing help in order to get their home sold. Some sellers offer closing help up front, knowing this is the case.

Whether or not you pay any of the buyers’ closing costs is a matter of negotiation when you receive an offer.  In the Crofton area, I find that many home sales do NOT include a subsidy.

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